Hershey reports first-quarter 2022 financial results

The Hershey Company announced net sales and earnings for the first quarter ended April 3, 2022, and raised its full-year financial outlook.

“We delivered strong double-digit sales and earnings growth with ongoing momentum across business units,” said Michele Buck, The Hershey Company President and Chief Executive Officer. “Our fast start, sustained consumer relevancy and increased visibility into our recently acquired businesses give us the confidence to increase our full-year net sales and earnings outlook despite an increasingly challenging and inflationary environment.”

First-Quarter 2022 Financial Results Summary1

  • Consolidated net sales of $2,666.2 million, an increase of 16.1%.
  • Organic, constant currency net sales increased 11.5%.
  • The impact of acquisitions on net sales was a 4.6-point benefit.2
  • Reported net income of $533.5 million and $2.57 per share-diluted, an increase of 35.3%.
  • Adjusted earnings per share-diluted of $2.53, an increase of 31.8%.

2022 Full-Year Financial Outlook

The company is raising its 2022 net sales and earnings per share outlook to reflect the strength of its performance in the first quarter and expectations for the balance of the year:

2022 Full-Year Outlook

Total Company

Net sales growth3

10% – 12%

Reported earnings per share growth

8% – 11%

Adjusted earnings per share growth

10% – 12%

The primary drivers of the increased outlook are sustained consumer demand and favorable price elasticities across all segments along with increased visibility into customer orders and programs of the recently acquired Dot’s and Pretzels businesses.  Elasticities were stronger than anticipated in the first quarter but are expected to moderate as consumers’ buying power is further pressured by inflation and fewer government benefits as the year progresses.  Incremental profit from higher sales is expected to be partially offset by supply chain inflation and higher costs to serve incremental demand, resulting in slightly higher adjusted earnings per share growth.

Below is a reconciliation of projected 2022 and full-year 2021 earnings per share-diluted calculated in accordance with U.S. generally accepted accounting principles (GAAP) to non-GAAP adjusted earnings per share-diluted:

2022 (Projected)


Reported EPS – Diluted

$7.69 – $7.91


Derivative mark-to-market gains


Business realignment activities

0.02 – 0.04


Acquisition-related activities

0.19 – 0.25


Noncontrolling interest share of business realignment and impairment charges


Other miscellaneous benefits


Tax effect of all adjustments reflected above



Adjusted EPS – Diluted

$7.91 – $8.05


2022 projected earnings per share-diluted, as presented above, does not include the impact of mark-to-market gains and losses on our commodity derivative contracts that are reflected within corporate unallocated expense in segment results until the related inventory is sold since we are not able to forecast the impact of the market changes.

First-Quarter 2022 Results

Consolidated net sales were $2,666.2 million in the first quarter of 2022 versus $2,295.9 million in the prior-year period, an increase of 16.1%.  Net price realization was a 6.9-point benefit driven primarily by list price increases across segments.  Volume drove an incremental 4.6-point benefit driven by the replenishment of distributor inventory levels in the North America Confectionery segment as well as favorable price elasticities.  Sales from the acquisition of Pretzels, Dot’s and Lily’s were a 4.6-point benefit and foreign exchange was not material in the first quarter.

Reported gross margin was 46.7% in the first quarter of 2022, compared to 45.7% in the first quarter of 2021, an increase of 100 basis points.  This increase was driven by higher derivative mark-to-market gains and net price realization, partially offset by higher supply chain inflation and costs.  Adjusted gross margin was 45.8% in the first quarter of 2022, in line with the prior-year period.  Net price realization, a timing benefit related to the inventory valuation method and fixed cost leverage benefited adjusted gross margin in the quarter, but were offset by broad-based supply chain inflation, increased labor investments and elevated costs to service higher-than-expected demand.  Unfavorable mix, driven by recent acquisitions and the accelerated growth of the North America Salty Snacks segment, also contributed to this offset.

Selling, marketing and administrative expenses increased 6.0% in the first quarter of 2022 versus the first quarter of 2021 primarily driven by higher amortization and operating expenses related to recent acquisitions.  Advertising and related consumer marketing expenses decreased 0.7% in the first quarter of 2022 versus the same period last year.  Lower levels of advertising in response to capacity constraints on select confectionery brands and efficiencies related to new media partners were offset by higher advertising accruals related to increased sales and increased brand investment in the North America Salty Snacks segment.  Selling, marketing and administrative expenses, excluding advertising and related consumer marketing, increased 9.9% versus the first quarter of 2021.  This increase was driven by higher amortization and operating expenses related to recent acquisitions and incremental capabilities and technology investments, partially offset by lower accruals for incentive compensation versus the prior-year period.

First-quarter 2022 reported operating profit of $721.0 million increased 30.4% versus the first quarter of 2021, resulting in an operating profit margin of 27.0%, an increase of 290 basis points.  Adjusted operating profit of $707.9 million increased 27.4% versus the first quarter of 2021, resulting in adjusted operating profit margin of 26.6%, an increase of 240 basis points.  Price realization and volume growth across segments, combined with a timing benefit related to the inventory valuation method and fixed cost leverage, more than offset broad-based inflation; higher supply chain costs, including investments in labor; and increased amortization and costs related to recent acquisitions to drive operating margin expansion in the first quarter.

The reported effective tax rate in the first quarter of 2022 was 21.2%, a decrease of 160 basis points versus the first quarter of 2021.  The adjusted effective tax rate in the first quarter of 2022 was 21.2%, a decrease of 130 basis points versus the first quarter of 2021.  Both the reported and adjusted effective tax rate decreases were driven by higher renewable energy tax credits and higher benefits related to employee-shared based payments versus the prior-year period.

The company’s first-quarter 2022 results, as prepared in accordance with GAAP, included items negatively impacting comparability of $13.1 million, or $0.04 per share-diluted.  For the first quarter of 2021, items positively impacting comparability totaled $3.7 million, or $0.02 per share-diluted.

Read more of this article in our latest edition here: March 2022 Single Issue form – International Confectionery Magazine (in-confectionery.com)

Media contact

Roshini Bains,
Editor, International Confectionery
Tel: +44 (0) 1622 823 922
Email: editor@in-confectionery.com

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